Finding a home is all the fun! However, financing a home in this market is a bit less enjoyable. Fortunately, the team members of Carolina Crew Realty are trained to know a little bit about all kinds of loans. Therefore, when you look at a home for sale in Winston Salem or the surrounding areas we can tell you what kind of expectations you should have for that home. For example we know the USDA 100% financing loan and what areas qualify. Likewise, we know that if you are getting an FHA loan the kinds of repairs that need to be fixed before it is appraised. Our agents attend the homes inspections for all our properties so we know what red flags to keep an eye out for as we view the home. Likewise, we know what a radon mitigation system looks like and what it does. Different loans are designed to help buyers of all kinds with different types of purchases. Therefore, we strive to stay familiar with the lending marketplace and the different products that are available to our clients.

Types of loans:

-FHA

-VA

-USDA

-Conventional

FHA loans are one of the most popular in the lending business right now simply because the rates are low and the downpayment in minimal. Most buyers can put down 3.5% and aside from a 100% loan (rare) this is the least amount out of pocket for a home buyer. Typically you can expect to pay more out of pocket with inspections, closing costs, etc. However, in a buyer’s market sellers are often asked to contribute “seller paid closing costs” that can help offset the other costs.

VA loans are one of the few loans that allow for 100% financing. However, in order to qualify you have to be a veteran or currently serving in the US military. Likewise, you only get one loan through the VA so you can only have one loan like this at a time.

USDA loans are also 100% financing but only certain homes are eligible. The home must be located is a USDA eligibility area. The USDA website has an address finder that will tell you if the property is in an eligible area. Typically these areas are rural. Forsyth county has a few areas that qualify. All of Kernersville, and the areas near the county line are usually a good bet.

Conventional loans are the easiest in terms of “speed bumps.” A conventional loan usually has no required inspections and the applicant is less scrutinized. However, the downpayment with a conventional loan is higher. Most of the time a buyer can expect to put down a minimum of 5% if they want to get a conventional loan. Likewise, you may expect a slightly higher rate but it will be very competitive.

Cash is king. If you are paying cash for a home then you have a lot more leverage with negotiations that anyone getting a loan. Cash can be several different things as well. If you are getting an equity loan from an existing property that can be treated as cash. Likewise, if you are pulling funds from a retirement account that also is a cash purchase. Often people think that paying cash means you have a large bank account that you can just write a check. While that can be the case it is more often a retirement account, equity line, or even a personal loan that is given to you for discretionary purposes.

Rehab or rehabilitation loans are highly sought after and rare. Nonetheless they are available. These types of loans fall into one of two categories. One, you are a flipper and want a loan to purchase, remodel, and then sell the house for profit. These loans are usually treated as a commercial loan and can be found at local banks for even some credit unions. Larger banks do not have a lot to offer in this area. Two, you are wanting to buy the home to live in as your primary residence and it needs repairs before you can move into the home. There are only a few options in this category as well. Most notable are the 203K and the Fannie Mae Home Style loan. There are others but these are the most poplar.

Constructions loans or sometimes called construction to perm (construction to be switched to permanent financing once the house is complete) vary widely from lender to lender. Some builders have their own preferred lenders that can offer a streamlined process and often some incentives. These vary depending on the type of construction, the builder, and the lender. Some require a Hefty downpayment to get build started and draws are made through the process until the home is complete. Others, (typically production builders) will allow a typical FHA type of loan and they will build it with your commitment (and some money down) that you will buy it once the home is finished.

Land heavy loans also are a varied and difficult product to obtain. If you are buying raw land you can expect to put around 20% down, you may find it as low as 15%. If you are buying a home that has more value in the land (i.e. lots of acreage) then you can find programs that will do 5-10% down. This usually requires a unique lender that is accustomed to land properties and is familiar with rural purchases.